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| Volume VIII, No. 44 |
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November 19, 1999 |
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| KEY RATE INDICES |
| Prime Rate |
8.50% |
| 11th District |
4.608% |
| 3 Mo. T’s (YTM) |
5.23%
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| 6 Mo. T’s (YTM) |
5.44% |
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| 5 Yr. U.S. T’s |
5.99% |
| 7 Yr. US T’s |
6.03% |
| 10 Yr. US T’s |
6.06% |
| 30 Yr. US T’s |
6.17% |
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| LIBOR - 1 mo. |
5.59% |
| LIBOR - 3 mo. |
6.09% |
| LIBOR - 6 mo. |
6.03% |
| LIBOR - 1 yr. |
6.16% |
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TRANSACTION OF THE WEEK
$8,600,000 Acquisition (99% of Cost) for 2 Midwestern Single Tenant Warehouse/Manufacturing Facilities: The same tenant (S&P Rated: "A") occupies both properties, located in adjacent states in the Midwest. Property 1: Loan Amount: $5,500,000, built 1973, 250,000 s.f., 1-story, 18 acres, 20-28 ft. clear heights. Property 2: Loan Amount: $3,100,000, built in early 70’s, 230,000 s.f., 1-story, 21 acres, 5,000 s.f. climate controlled test area. Both properties contain approx. 10% office buildout. GSP arranged CTL financing with a life company specializing in single-tenant credit lease transactions. Challenges/Solutions: (1) Lease expiration (for both properties): 2007; Lender structured a highly unusual term/amort. schedule (8 yr. term/9 yr. amort.); (2) Tenant may opt out of the lease at any time based upon a early buyout formula. GSP negotiated a prepayment feature with the lender to accommodate this event risk. Lender also locked the all-in rate at application, before a run-up in Treasuries, and took 5 weeks to close from application. Terms: (1) Rate: 5 yr. T + 2.40%; (2) Term/Amort: 8/9; (3) Loan-To-Cost: 99%; (4) DCR: 1.09; (5) Non-recourse; (6) Lender Fee: 1.25%. (Steve Bram, Brad Black) |
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| $7,500,000 Acquisition for Single-Tenant Call Center in San Antonio: The seller in this transaction is a GSP client. We became involved when the buyer’s lender "blew up" and needed to close quickly. The one-story, 85,000 s.f. call center is leased to a non-investment grade private tenant. The project was a 1980’s build-to-suit. Challenge/Solution: The tenant is operating in the red…. Lender accepted a 3 year guarantee of lease payments from a AAA rated insurance company, borrower purchased said policy. Terms: (1) Rate: 10 yr. T + 2.55%; (2) Term/Amort: 10/30; (3) LTV: 70%; (4) DCR: 1.30; (5) Non-recourse; (6) Lender Fee: Par. (J. Jay Brooks, Gary E. Mozer) |
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| Interest Rate/CMBS Update: Rates — The Fed’s raising of the discount rate on Tuesday was expected. Greenspan has wanted to balance 1998’s 3 consecutive rate cuts during the Russian debt crisis and bond market meltdown. However, recent economic reports indicate a still robust domestic economy. With this year’s Christmas season expected to produce record retail volume and crude oil prices at their highest levels since the Gulf war, inflationary pressures may cause Greenspan to deem another rate increase necessary in early 2000. Quote from major IB bond trader: "We aren’t out of the woods yet". CMBS: Over the last few weeks, a consensus has emerged in the capital markets: Y2K is a non-event. This has led to an interesting dynamic: (1) Less than normal supply of new conduit pools going to market this month; (2) Plenty of liquidity in the market; (3) Dramatic spread tightening with AAA 10 yr. bonds priced as low as + 119, after being mired in the 135-150 range for months. Lenders are rushing out new matrices with typical pricing as follows: Multifamily 190-200, Anchored Retail, 200-210, Industrial 200-210, Office 220-230, Unanchored Retail 225-235. Stay tuned… |
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HOT MONEY!!!
Need to close by year-end? Do you want certainty? There are less than 30 business days left in 1999. Private bridge lender can close your deal with certainty before December 31st. Additionally, GSP can place your permanent take-out loan shortly thereafter. Program Highlights: (1) Geographic: Nationwide; (2) Investment Size: Min. $2,000,000, ($1,000,000 in California); (3) Minimal Due Diligence: Usually no third party reports nor legal fees required; (4) Non-recourse and no prepayment penalty; and (5) Surety of closing by December 31st. (David Ellis at ext. 109 or dellis@gspartners.com)
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| SPEAKER'S CORNER |
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George Smith will be moderating the Finance Panel at Real Estate Conference Group’s "Real Estate 2000… Looking to the Millennium"; Date: January 21, 2000; Location: Century Plaza Hotel (Los Angeles); Keynote Speakers: (1) Sam Zell, Chairman, Equity Group Investments, Inc.; (2) Governor Pete Wilson, Managing Director, Pacific Capital Group.
For more information, call (310) 285-5327
or go to www.realestateoutlook.com.
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